HEALTH ACCESS UPDATE
Tuesday, September 9th, 2003
SB 2 VOTED OUT OF CONFERENCE COMMITTEE
* Major Extension of Health Coverage Heads to Assembly & Senate Floors
SB 2 (Burton), a bill to extend employer-based coverage to over one million working Californians, was voted out of conference committee this evening on a party line vote of 4-2. It now heads to the Assembly and Senate for consideration by the end of legislative session this Friday, September 12th.
Below is a description of the committee discussion, a summary of the changes in the bill since last week, and a revised summary of the key provisions of SB 2, which is also ATTACHED.
Advocates for the bill should immediately generate calls and fax letters to their Assemblymembers and Senators to support SB 2.
At the committee, Senator Burton outlined the need for the bill, including the fact that “the uninsured live sicker, die younger” and have dire financial consequences. Committee members made brief statements on the bill. In opposition, Assemblymember Pacheco warned of a challenge under the ERISA law. Senator Sam Aanestad argued against using the “awesome power of the state” to require employers to provide health care to their workers, and warned that “it borders on the immoral.” Burton responded later that most employers already do provide coverage, and only through the “long arm of the state” do we have unemployment insurance, the minimum wage, the eight-hour day, and despite protests and predictions of doom, “they end up working all right.”
Senator Dede Alpert, sitting in for Senator Jackie Speier who was away for personal reasons, remarked about one of her first experiences 13 years ago first coming to Sacramento was participating in a committee considering health care reforms, including pay-or-play and single-payer bills. Given the lack of progress since then, she is supporting SB 2 as “a good step” to deal with the ongoing health care crisis. She also cited that there was at least two years of implementation time to work out issues with employers and others. Assemblyman Dario Frommer called this a “historic opportunity,” and “since it is clear that Washington will never take the step” toward health care reform, California must, especially as it has the third worst rate of residents insured. He stated that the “committee had listened to the concerns” about small business and other issues, and produced a “fair bill.”
After the hearings on Wednesday and Thursday of last week, the conference committee and sponsors took the suggestions and made numerous amendments to the bill. The bill maintain the basic principles and framework as before. Changes are mostly in the details, and include the following:
* The implementation date has been delayed a year. Employers of over 200 workers would be affected January 2006; Employers of over 20 workers would be affected January 2007.
* The provision that the bill will not apply to employers with between 20 and 49 workers without the passage of a 20% tax credit for such employers.
* The creation of premium assistance program and wrap-around benefit for those with employer-provided coverage but that are eligible for Medi-Cal coverage. The wrap-around benefit would cover “any gap between employer-based health care coverage and the benefits provided by the Medi-Cal program,” and “pay for any co-payments, deductibles, and other allowable out-of-pocket medical costs.” The premium assistance program would provide a Medi-Cal recipient with “his or her share of premium” to “coincide” with required payments to the employer. (Medi-Cal applicants waiting for verification will get “promptly reimbursed.”)
* The creation of another premium assistance program with a wraparound benefit for those eligible for Healthy Families that are offered employer-sponsored health coverage.
* The addition of intent language that nothing in the bill should be construed “to diminish or otherwise change existing protections in law” for those eligible for public insurance programs.
* Changes to the insurance underwriting and market reforms.
* Additional language to protect safety-net hospitals and community clinics from negative reimbursement impacts.
* Language changes to deal with legal challenges under ERISA.
* Many technical corrections.
* The shifting of the intent language on “disease management” and “evidence-based medicine” to a companion bill, AB 1528. That bill, which was also voted out of the conference committee on a 6-0 vote, creates a “health care quality improvement and cost containment commission” that looks at these and other ideas to confront cost issues. Language acknowledged the needs of people with disabilities, as well as the need to take into account racial, ethnic, and gender disparities.
KEY PROVISIONS OF SB 2 (BURTON):
HEALTH CARE FOR WORKING FAMILIES
Covered employers required to pay a user fee into a state health purchasing fund. Employers would get a credit against the fee if they provide coverage to their workers. Over 18 million Californians get health coverage through their employer; SB 2 would use modest means, using the existing employer-based system and existing agencies and expertise, to expand coverage to over 1 million more.
§ 1 million-1.5 million workers and their families covered out of 4.5 million uninsured at one time.
§ Half of uninsured workers covered by SB2 if employers of 20 or more.
§ Would cover 20%-25% of uninsured children or about 200,000 children.
§ 87.5% of employers have fewer than 20 employees and thus are exempted.
§ Over 80% of California employers with more than 10 employees already provide basic health coverage to their workers, and thus could get a full credit against the fee.
§ Overall, 97.5% of employers could have the fee waived or credited, and thus would not be directly impacted.
§ Only large and medium employers that don’t provide health care to their workers—roughly 2.5% of employers—would be impacted by the new requirements.
§ Net cost to employer per covered worker: $1200-$1300.
§ For employees working for employers with over 200 workers, family coverage.
(January 1, 2006)
§ For employees working for employers with between 20 and 199 employees, worker only coverage. (January 1, 2007)
§ Employers from 20-50 workers exempted from the fee, until a tax credit to provide assistance to such employers is enacted, by 2007.
§ Employers with less than 20 employees are exempted from the fee.
§ Workers must work at least 100 hours per month, for at least 3 months, for one employer.
§ Seasonal worker eligibility being developed.
§ Temporary agencies and farm labor contractors considered employers.
§ Anything that meets the requirements of Knox-Keene plus prescription drugs.
§ Any group health insurance policy under DOI that meets PPO standards and covers prescription drugs.
§ Any Taft-Hartley Trust Fund or collectively bargained agreement.
§ Any self-insured group plan with similar benefits.
§ Creates State Health Purchasing Fund to purchase health coverage.
§ Managed Risk Medical Insurance Board (MRMIB) to set user fee and administer purchasing program for covered employers that pay the user fee.
§ Employment Development Department (EDD) to collect employer user fee in the same manner as it collects UI, SDI, and ETT as well as PIT withholding.
Affordability for employers
§ 80% share of premium paid by employer; employer can choose to pay as much as 100%.
§ Purchasing program will reduce costs for businesses by giving them purchasing leverage similar to CalPERS.
§ Premium savings from reduced unreimbursable costs.
§ Employers can drop coverage for dependents covered by another employer’s coverage.
§ MRMIB authority to develop cost containment measures.
Affordability for workers
§ Maximum contribution of 20% of premium with share of premium capped for low wage workers (below 200% of the Federal Poverty Level) to 5% of their wages.
§ Limits on total co-pays and deductibles, to be determined by MRMIB, for workers covered by the fund and by DMHC and CDI for coverage provided outside.
§ For workers covered by the state fund and eligible, they could enroll in Medi-Cal.
§ For workers eligible for public insurance programs but whose employers choose to purchase coverage directly, Medi-Cal and/or Healthy Families would be available as secondary coverage, just as it is now. A premium assistance program would also be available.
§ Employers cannot designate workers as independent contractors or temporary workers, or reduce worker hours, to evade their obligation.
§ Employers who do not provide coverage as required must pay double the fee they would have owed under this obligation.
State Budget Savings
§ Between 40% and 50% of Medi-Cal enrollees and most Healthy Families enrollees are workers or their children. If their employers pay into the fund, the fund will pay the state share of costs.
§ Estimated to be $620-$900 million in state budget savings.
Safety Net Providers (County Hospitals, Community Clinics)
§ Workers and their families eligible for Medi-Cal will have incentive to sign up, minimizing funding impact for safety net providers.
§ Health care plans shall make every effort to contract with safety net providers
§ Covered employer pays user fee to EDD.
§ User fee waived if employer presents proof of coverage.
§ Regulation through insurance products sold, not what employer is required to purchase.
Insurance Market Reform
§ Rules inside and outside of the pool to be similar
§ Generally expands existing small group insurance underwriting law (for 2-50) to covered employers under 200 workers.
§ All HMOs and insurers that offer coverage in the small group market must offer coverage for all covered employers: guaranteed offer and renewal.
§ Restriction of risk categories to age, geographic region and family composition.
§ Specified disease, hospital only, vision only, accident only and other specialized coverage does not count as coverage for purposes of establishing proof of coverage sufficient to have user fee waived.
Security for the Insured
§ 80% of all California workers work for businesses with more than 20 employees.
§ Three quarters of workers work over 25 hours per week.
Anthony E. Wright
1127 11th St., #234, Sacramento, CA 95814
Ph: 916-442-2308, Fx: 916-497-0921